Technology companies were some of the biggest winners during the pandemic, as lockdowns led people to spend more of their business – and lives – online. This added trillions of dollars to the market value of these companies, making them a major impact on broad-based stock market indices such as the S&P 500.
As economies began to reopen, high-flying stocks such as Netflix, Peloton and Zoom fell back to earth. The growing concerns about inflation, geopolitics and the possibility of a recession have also hit tech giants such as Apple and Amazon in recent months, with investors reassessing their high ratings. The tech-heavy Nasdaq composite index is down nearly 30 percent from its high in mid-November.
When the S&P 500 index drifted to a bearish level, defined as a 20% drop from a recent peak, tech stocks continued to decline. The technology sector accounts for nearly 30 percent of the value of the S&P 500, and only five of the industry’s largest companies – Alphabet, Amazon, Apple, Meta and Microsoft – account for about 20 percent of the index.
Since the beginning of the year, when the S&P 500 hit its peak, the fall of these tech giants explains much of the overall decline in the stock market:
Alphabet is down 22.8 percent this year, through Wednesday’s closing, a decline worth approximately $ 440 billion in market value.